Non-linear Break Even Analysis
If assumptions of constant price and AVC are relaxed we get non-linear break even analysis (Fig. 6.11b). There are two break even points Q1 and Q3 Profit, the vertical distance between the total revenue and total cost, is maximised at output rate Q2' The output rate Q2 is relevant when the firm begins to earn profits. The firm should not produce beyond Q2 because this would lead to reduction in profit. No rational manager will expand production to second breakeven rate Q3 and, therefore, it is irrelevant.
![1536_Linear Break Even Analysis.png](https://www.expertsmind.com/CMSImages/1536_Linear%20Break%20Even%20Analysis.png)
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